Executive Summary

Q3 2025 headline revenue fell 38.6% YoY to $13.82M as ~$10.9M of sales were deferred (primarily ARK: Survival Ascended’s Lost Colony pre-sales), driving near-zero gross margin; bookings rose 9.3% YoY to $17.6M, evidencing underlying demand .
GAAP net loss was $(7.87)M vs $0.23M profit a year ago; EBITDA was $(9.7)M vs $0.5M in Q3’24, pressured by fixed related-party license fees (~$6M/quarter) against depressed recognized revenue and film asset impairments .
Management expects a materially stronger Q4: targeting a December 2025 launch for ARK: Lost Colony with ~$5.8M of deferred revenue recognized in Q4 and ~$26.5M recognized over the next 12 months, improving top-line visibility .
Versus S&P Global consensus, Q3 missed on all key metrics: revenue $13.82M vs $22.00M*, EPS $(0.21) vs $(0.05), EBITDA $(9.33)M vs $(2.00)M; thin coverage (one estimate) suggests high dispersion risk going forward (miss largely timing/deferral-related) *. Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

Underlying demand held up: Bookings grew 9.3% YoY to $17.6M on ARK promotions, Lost Colony pre-sales, and Aquatica; nine-month bookings up 14.3% to $67.0M .
Engagement and franchise health: Q3 ASA average DAU ~92,876; ARK Mobile average DAU ~144,750; cumulative ARK playtime reached 4.2B hours; Lost Colony pass units ~306K sold by quarter-end .
Liquidity improved: Unrestricted cash ended Q3 at $12.3M vs $7.3M at 12/31/24, aided by operating cash flow of ~$4.2M YTD .

“Bookings also continues to increase, reflecting strong demand and building backlog... The majority of deferred revenue is expected to be recognized within the next 12 months” — CEO Hai Shi .

What Went Wrong

Recognized revenue and margins compressed sharply: Revenue $13.82M vs $22.53M (YoY), gross profit ~$0.01M, as ~$10.9M of sales were deferred; net loss $(7.87)M vs $0.23M profit in Q3’24 .
Non-GAAP profitability deteriorated: Q3 EBITDA $(9.7)M vs $0.5M in Q3’24; nine-month EBITDA $(15.6)M vs $1.6M last year .
Fixed related-party license fees (~$6M/quarter) created operating deleverage when recognized revenue dipped, and Q3 included film asset impairment ($0.34M) .

Financial Results

Metric	Q1 2025	Q2 2025	Q3 2025	Q3 2024
Revenue ($USD)	$20,110,872	$22,185,750	$13,819,527	$22,530,372
Bookings ($USD)	$22,200,000	$27,100,000	$17,600,000	$16,100,000
Gross Profit ($USD)	$5,847,527	$6,954,745	$14,406	$8,706,428
Gross Margin %	29.1% (calc.)	31.3% (calc.)	0.1% (calc.)	38.7% (calc.)
Net Income ($USD)	$(1,946,963)	$(16,562,706)	$(7,865,694)	$233,161
Diluted EPS ($)	$(0.06)	$(0.44)	$(0.21)	$0.01
EBITDA ($USD)	$(3,200,000)	$(2,400,000)	$(9,700,000)	$500,000
Unrestricted Cash ($USD)	$9,400,000	$7,900,000	$12,300,000	—

Notes: Margins are calculated from cited revenue and gross profit.

KPIs and Franchise Metrics

KPI	Q1 2025	Q2 2025	Q3 2025
ARK: Survival Evolved (ASE) Units Sold	690,775	1,196,583	576,324
ARK: Survival Ascended (ASA) Units Sold	751,960	807,065	499,199
Lost Colony Expansion Pass Units (ASA)	—	—	~306,000 (as of 9/30/25)
ARK Mobile Avg DAU	143,976	104,135	144,750
ASA Avg DAU	—	84,585	92,876

Actual vs S&P Global Consensus — Q3 2025

Metric	Consensus	Actual	Surprise
Revenue ($USD)	$22,000,000*	$13,819,527	$(8,180,473) / -37.2%
Primary EPS ($)	$(0.05)*	$(0.21)	$(0.16)
EBITDA ($USD)	$(2,000,000)*	$(9,334,656)	$(7,334,656)

Values retrieved from S&P Global.
Note: EBITDA “actual” uses EBITDA reconciliation; magnitude matches reported $(9.7)M with rounding .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Deferred revenue recognition (Lost Colony)	Q4 2025	Not specified	~$5.8M to be recognized in Q4 upon launch	New
Deferred revenue recognition (non-refundable)	Next 12 months	Not specified	~$26.5M expected to be recognized	New
ARK: Lost Colony DLC Launch	Q4 2025	Preparing for launch (no date)	Targeting December 2025	Updated (date set)
Outlook color	Q4 2025	Not specified	Expect “significantly stronger” Q4 vs Q3	New
Stablecoin initiative	Near-term	Exploring initiative	Infrastructure build + multi-state licensing progress; more updates in “next couple months”	Updated

Earnings Call Themes & Trends

Topic	Q1 2025 (Mar)	Q2 2025 (Aug)	Q3 2025 (Nov)	Trend
Stablecoin/digital assets	No initiative disclosed in 10-Q/8-K; focus on games -	Announced intention, set up Snail Coins LLC, ATM for reserves, GENIUS Act cited	Infrastructure build underway; advancing multi-state licensing; near-term updates; views stablecoin as future of payments	Accelerating from exploration to execution
ARK DLC pipeline	Teased Aquatica, Astraeos; Lost Colony trailer revealed	Lost Colony pre-sales launched; multiple events/content drops -	Lost Colony targeting Dec-2025; strong pre-sales, ~306k passes	Building to Q4 monetization
Bookings vs revenue (deferrals)	Q1 bookings +13.6% YoY; revenue +42.5% with lower deferrals YoY -	Q2 bookings +18.5% YoY; revenue +2.7% YoY with higher deferrals -	Q3 bookings +9.3% YoY; revenue down on $10.9M deferrals; $36.4M deferred balance	Bookings strength; revenue timing headwind
Gross margin dynamics	Not highlighted	Margins ~31% amid higher costs	Margin compression explained by fixed ~$6M quarterly license fee and deferrals	Margin leveraged to revenue recognition
Indie/other media	Indie launches, trailers; Salty TV soft-launched (49 dramas) -	New indie rights; The Fame Game announced	Rebel Engine launch “Positive” rating; 67 SaltyTV dramas	Growing portfolio and reach

Management Commentary

“Our reported top-line performance does not fully capture the underlying growth we are experiencing due to the revenue recognition timing of deferred revenue increasing to approximately $10.9 million… Bookings also continues to increase, reflecting strong demand and building backlog.” — CEO Hai Shi .
“We are making steady progress toward becoming one of the first gaming companies to launch a proprietary stablecoin… advancing both the underlying infrastructure and multi-state regulatory approvals.” — CEO Hai Shi .
“Deferred revenue balance was $36.4 million… we expect ~$26.5 million recognized within the next 12 months and ~$5.8 million in Q4 with Lost Colony.” — CFO Heidy Chow .
“Engagement across ARK continues to remain strong and stable… Lost Colony pre-sales have delivered strong results… ~306,000 units sold.” — SVP Peter Kang .

Q&A Highlights

Gross margin contraction: CFO cited fixed related-party license fee (~$6M/quarter) paid regardless of recognized revenue, plus ~$5.9M of Lost Colony sales deferred and Q2 sale pulling forward some ASE base demand .
Deferred revenue timing: ~$5.9M Lost Colony recognized in Q4 on release; ~$10.3M tied to Genesis 1 & 2 recognized upon release in 2026 timeframe; majority of the $36.4M balance recognized within ~12 months, assuming timely delivery .
Business mix: Majority of deferred revenue relates to gaming performance obligations; some is deposits for future games .

Estimates Context

Q3 2025 vs S&P Global: Revenue $13.82M vs $22.00M* (miss), EPS $(0.21) vs $(0.05)* (miss), EBITDA $(9.33)M vs $(2.00)M* (miss); one estimate per metric indicates limited coverage and higher potential volatility. Primary miss driver was revenue recognition timing (deferred) rather than bookings/demand *. Values retrieved from S&P Global.

Consensus vs Actual — Recent Quarters

Metric	Q1 2025 Consensus	Q1 2025 Actual	Q2 2025 Consensus	Q2 2025 Actual	Q3 2025 Consensus	Q3 2025 Actual
Revenue ($USD)	$18,000,000*	$20,110,872	$26,000,000*	$22,185,750	$22,000,000*	$13,819,527
Primary EPS ($)	$(0.10)*	$(0.06)	$(0.01)*	$(0.44)	$(0.05)*	$(0.21)
EBITDA ($USD)	$(4,500,000)*	$(3,200,000)	$125,000*	$(2,400,000)	$(2,000,000)*	$(9,700,000)
# of Estimates (Rev/EPS)	1/1*	—	1/1*	—	1/1*	—

Values retrieved from S&P Global.

Key Takeaways for Investors

The quarter’s print masks demand strength: bookings rose and ARK engagement remained solid; the delta is timing (deferred) not end-demand deterioration .
Q4 setup is favorable: December Lost Colony release plus ~$5.8M deferred recognition should lift reported revenue; additional ~$26.5M non-refundable deferred expected over 12 months .
Margin sensitivity is high to revenue recognition given fixed related-party license fees (~$6M/quarter); higher recognized revenue should normalize gross margin from Q3’s trough .
Cash improved to $12.3M; operating cash flow positive YTD, reducing near-term liquidity risk while funding pipeline .
Stablecoin initiative progressing (infrastructure and licensing); while early, potential monetization/efficiency optionality could become a narrative catalyst alongside ARK content cadence .
Expect estimate revisions: consensus likely to recalibrate on revenue timing, Q4 recognition, and EBITDA trajectory; thin coverage increases dispersion risk*. Values retrieved from S&P Global.
Trading lens: Near-term catalysts include the Lost Colony launch/date certainty and any stablecoin regulatory update; watch for Q4 recognized revenue inflection and gross margin rebound .

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